Pound Euro Exchange Rate Muted as UK Local Elections Loom

Modified: Thursday, 7 May 2026 10:51 BST - Written by Frank Davies

STORY LINK Pound Euro Exchange Rate Muted as UK Local Elections Loom

The Pound Euro (GBP/EUR) exchange rate moved sideways on Wednesday, as stronger UK PMI figures were offset by caution ahead of the country’s local elections.

At the time of writing, GBP/EUR was trading at €1.1565, leaving the pairing virtually unchanged on the day.

The Pound (GBP) moved without clear momentum on Wednesday, with Sterling unable to draw much support from stronger UK PMI figures.

The final UK services PMI was revised modestly higher, rising from 50.5 in March to 52.7 in April and beating the preliminary reading of 52.

As the services sector accounts for a large share of the UK economy, the faster pace of expansion offered some encouragement to Pound investors.

However, Sterling’s gains were limited by caution ahead of the UK’s local elections, with the prospect of political uncertainty keeping pressure on the currency.

The Euro (EUR) traded unevenly on Wednesday, as the latest Eurozone PMI data created some pressure for the common currency.

Finalised figures for April confirmed that private sector activity across the bloc contracted last month, weighing on Euro sentiment.

However, the single currency found support through its strong negative correlation with the US Dollar (USD). As the American currency weakened in a risk-on trading environment, the Euro was able to avoid losses.

Near-Term GBP/EUR Forecast: Could UK Local Elections Weigh on Sterling?

Looking ahead, the UK local elections are likely to be the main event for GBP investors. With the vote expected to prove difficult for the ruling Labour Party, the Pound could come under pressure if the results point to a sharp drop in support.

A poor showing for Labour may revive speculation over whether Prime Minister Keir Starmer could face a leadership challenge. Any signs of political instability could unsettle UK bond markets and cast a shadow over the Pound.

For EUR investors, the focus will shift to the latest Eurozone releases, beginning with Germany’s newest factory orders figures. A solid increase in orders in March could offer the common currency some support.

However, the Eurozone’s latest retail sales data may later weigh on the Euro, particularly if sales contracted in March as forecast.

Meanwhile, remarks from several European Central Bank (ECB) policymakers could also drive movement in EUR. Any hawkish commentary may help lift the single currency.

International Money Transfer? Ask our resident FX expert a money transfer question or try John's new, free, no-obligation personal service! ,where he helps every step of the way, ensuring you get the best exchange rates on your currency requirements.

TAGS: Pound Euro Forecasts